Study The Problem Of Information Asymmetry In The Process Of Rural Urbanization In China

'Three-dimensional rural' issue is the fundamental issue which decides the future of our party and country all long. Urbanizing the rural areas is efficient approach of solving 'Three-dimensional rural' issue. Reviewing the course of China's urbanization during past twenty years, we can find that the goal of urbanization can't be reached as we expected. Level of urbanization was far behind that of industrialization and economy development. It closely related to information asymmetry in rural urbanization process.This paper analyzes Principal-Agent relationship among the Central Government, local governments and peasants by information economics theory based on the analysis of status of information asymmetry in rural urbanization process. It illuminates that how does information asymmetry lead to deviating of local governments' conducts from the Central Government's goal of urbanization through establishing moral hazard model between the Central Government and local governments. It also explains that how does information asymmetry lead to local governments' 'poor quality decision-making expelling high quality decision-making' through adverse selection modeling between peasants and local governments. Based on these, it puts forward solution to moral hazard problem of local governments through supervision, incentives, penalties and other mechanisms and measure to solve adverse selection problem of local governments through the democratic election mechanism. Furthermore, it presents the policy suggestion for improving existing problems in China's current urbanization, thus promoting rural urbanization healthy and orderly development.